30th Jan 2008 07:01
Begbies Traynor Group PLC30 January 2008 BEGBIES TRAYNOR GROUP PLC IFRS Restatement Report 30 January 2008 This report covers the restatement of the opening consolidated balance sheet asat 1 May 2006, the consolidated accounts for the year ended 30 April 2007 andthe consolidated accounts for the six months ended 31 October 2006 underInternational Accounting Standards and International Financial ReportingStandards (collectively referred to as "IFRS" through this document) in respectof Begbies Traynor Group plc. The IFRS adjustments are not audited. 1. Introduction All companies listed on the Alternative Investment Market ("AIM") are requiredto prepare consolidated financial statements in accordance with IFRS foraccounting periods commencing on or after 1 January 2007. Begbies Traynor Groupplc ("the Group") will publish its 2008 annual report in accordance with IFRS.Previously, the Group prepared its financial statements in accordance withaccounting standards generally accepted in the UK ("UK GAAP"). This documentprovides information on the impact of adoption of IFRS on the Group's financialstatements. The adoption of IFRS represents a change in the basis of preparationof financial statements and does not therefore affect the operations or cashflows of the Group. The Group has adopted IFRS with effect from 1 May 2007. The transition date is 1 May 2006 as this is the start of the earliest period for which the Group willpresent full comparative information under IFRS in the 2008 Annual Report andAccounts. The purpose of this document is to provide information on the expected impact ofIFRS. The financial information represents our current best estimates and may beaffected by business or other changes or by changes to IFRS standards or theinterpretation thereof. As such, it should be treated with appropriate caution.The information is based on IFRS expected to be effective at 30 April 2008. Thestandards currently in issue are subject to ongoing review and endorsement bythe European Union, and the application of the standards continues to be subjectto interpretation by the International Financial Reporting InterpretationsCommittee ("IFRIC") and emerging practice. This document presents the unaudited consolidated income statement for the yearended 30 April 2007 and the six months ended 31 October 2006 and the unauditedconsolidated balance sheets as at 1 May 2006, 31 October 2006 and 30 April 2007under IFRS. The financial information set out in this statement relating to the year ended30 April 2007 does not constitute statutory accounts for that period. Fullaudited accounts of the Group in respect of that financial period in accordancewith UK GAAP, which received an unqualified audit opinion and did not contain astatement under either section 237(2) or (3) of the Companies Act 1985, havebeen delivered to the Registrar of Companies. 2. Financial highlights The key financial highlights of adopting IFRS are: -------------------------------------------------------------------------------- Year ended Six months ended 30 April 2007 31 October 2006 UK GAAP as UK GAAP as IFRS 2 reported 1 IFRS 2 reported 2 £000 £000 £000 £000--------------------------------------------------------------------------------EBITA 3 9,286 10,064 4,099 4,442Profit for the period 5,040 3,380 2,244 1,382Basic earnings per share(pence) 6.7 4.5 3.0 1.8-------------------------------------------------------------------------------- ----------------------------------------------------------------------Net assets UK GAAP IFRS as reported £000 £000----------------------------------------------------------------------As at 30 April 2007 49,825 2 48,788 1As at 31 October 2006 40,008 2 39,770 2As at 1 May 2006 37,742 2 38,365 1---------------------------------------------------------------------- Notes: 1. Audited 2. Unaudited 3. Earnings before interest, tax and amortisation of goodwill (UK GAAP) / intangible assets arising on acquisition (IFRS) The impact of significant changes in accounting policies is detailed in section 5 with a reconciliation of the impact on profit for the period and net assets in section 6. 3. Basis of preparation The Group's financial statements for the year ended 30 April 2008 will beprepared in accordance with IFRS and the comparatives for those periods will berestated to reflect IFRS, except where otherwise required or permitted by IFRS1, "First Time Adoption of International Financial Reporting Standards". This document has been prepared in accordance with the accounting policiesdescribed in more detail in Appendix 1; these comply in all material aspectswith IFRS and interpretations from the IFRIC. 4. IFRS transitional arrangements The International Accounting Standards Board (IASB) issued IFRS 1 "First TimeAdoption of International Financial Reporting Standards" to establishrequirements for the first time adoption of IFRS. In general a company isrequired to select accounting policies that comply with IFRS and apply theseaccounting policies retrospectively to all of the periods presented in the firstIFRS financial statements. The opening IFRS balance sheet is to be prepared atthe date of transition to IFRS based upon the selected accounting policies underIFRS. The transition date is the earliest period for which the full comparativeinformation is presented in accordance with IFRS. The Group's transition date is1 May 2006. IFRS 1 allows a number of exemptions to be taken in preparing the openingbalance sheet as at 1 May 2006 and in preparing the comparative information forthe year ended 30 April 2007. The Group has elected to take the businesscombinations exemption. Under this exemption, business combinations that tookplace before the transition date are not restated and all goodwill amortisedprior to the date of transition remains written off to reserves. No furtherexemptions have been taken. 5. Significant changes in accounting policies Significant changes in accounting policies are discussed below along with thefinancial impact on previously reported results under UK GAAP. (a) Business combinations Under IFRS 3, goodwill is not amortised but is measured at cost less impairmentlosses. Under UK GAAP goodwill was amortised on a straight line basis over theperiod of its expected useful life. This adjustment increases profit before taxand goodwill for the six months to 31 October 2006 by £1,898,000 and for theyear to 30 April 2007 by £3,951,000. IFRS 3 requires that intangible assets arising on acquisition, that areseparable or arise from contractual or other legal rights, be recognised asintangible assets separately from goodwill. This adjustment results inadditional intangible assets of £876,000 at 31 October 2006 and £1,041,000 at 30April 2007 with a corresponding reduction in goodwill. This adjustment givesrise to a deferred tax liability and a corresponding increase in goodwill of£263,000 at 31 October 2006 and £312,000 at 30 April 2007. The intangible assetswill be amortised on a straight line basis over their expected useful economiclife. This decreases profit before tax and intangible assets for the six monthsto 31 October 2006 by £219,000 and for the year to 30 April 2007 by £520,000. IFRS 3 requires the restatement of comparative figures in relation to the adjustment of initial acquisition accounting completed using provisional estimates.This decreases goodwill at 31 October 2006 and 30 April 2007 by £108,000,decreases recoverable income and costs on cases at 30 April 2007 by £236,000 anddecreases profit before tax for the six months to 31 October 2006 by £108,000and for the year to 30 April 2007 by £344,000. The deferred tax impact of these adjustments is decreased profit after tax and adeferred tax liability of £503,000 for the six months to 31 October 2006 and£958,000 for the year to 30 April 2007. (b) Deferred consideration IFRS 3 requires deferred consideration on business combinations to be recognisedat present value. This results in reduced deferred consideration of £441,000 at1 May 2006, with a corresponding reduction in goodwill. The subsequent unwind ofthe discounting is charged to the income statement as a finance cost on anannual basis. This adjustment decreases profit after tax for the six months to31 October 2006 by £42,000 and for the year to 30 April 2007 by £165,000. (c) Prepayments IAS 38 requires all advertising and promotional activities to be expensed asincurred. This reduces prepayments by £136,000 at 1 May 2006 and 31 October 2006and £339,000 at 30 April 2007 and reduces profit before tax for the year to 30April 2007 by £203,000. The deferred tax impact of these adjustments is a deferred tax asset of £41,000at 1 May 2006 and 31 October 2006 and £102,000 at 30 April 2007 and increasedprofit after tax for the year to 30 April 2007 by £61,000. (d) Impairment review at date of transition IFRS 1 requires an impairment review to be performed at the date of transition.As a result of this review an impairment has been allocated against thefollowing assets at 1 May 2006: Goodwill £110,000, intangible assets £187,000,prepayments £330,000. The deferred tax impact is the recognition of a deferred tax asset of £99,000 at1 May 2006. (e) Revenue recognition IAS 18 includes the following conditions for the recognition of revenue relatingto services rendered: • The amount of revenue can be measured reliably; • It is probable that economic benefits will flow to the entity; • The stage of completion of the engagement at the balance sheet date can be measured reliably; and • The costs incurred for the transaction and the costs to complete can be measured reliably. The directors have reviewed the accounting policy for revenue recognition oncontingent fee engagements and believe that a more appropriate policy under IAS18 is to recognise revenue only after having achieved virtual certainty of asuccessful outcome to an engagement at the balance sheet date. The impact ofthis revised accounting policy is to reduce recoverable income and costs oncases, reported revenue and EBITA by £235,000 in the six months to 31 October2006 and by £231,000 in the year to 30 April 2007, a deferred tax credit to theincome statement and related deferred tax asset of £71,000 at 31 October 2006and £69,000 at 30 April 2007. 6. Reconciliation of financial impacts on reported net assets and profit for theperiod The financial impact on reported net assets is as follows: -------------------------------------------------------------------------------- 30 April 2007 31 October 2006 1 May 2006 £000 £000 £000--------------------------------------------------------------------------------UK GAAP net assets 48,788 39,770 38,365(a) Business combinations 2,129 1,068 -(b) Deferred consideration (165) (42) -(c) Prepayments (237) (95) (95)(d) Impairment (528) (528) (528)(e) Revenue recognition (162) (165) ---------------------------------------------------------------------------------IFRS net assets 49,825 40,008 37,742-------------------------------------------------------------------------------- The financial impact on profit for the period is as follows: -------------------------------------------------------------------------------- Year ended Six months ended 30 April 2007 31 October 2006 £000 £000--------------------------------------------------------------------------------UK GAAP profit for the period 3,380 1,382(a) Business combinations 2,129 1,068(b) Deferred consideration (165) (42)(c) Prepayments (142) -(d) Impairment - -(e) Revenue recognition (162) (165)--------------------------------------------------------------------------------IFRS profit for the period 5,040 2,244-------------------------------------------------------------------------------- Appendix 1: Revised accounting policies under IFRS The significant accounting policies which the Group has applied to its half yearfinancial statements for the six months to 31 October 2007 and which it expectsto apply to its full financial statements for the year ending 30 April 2008 areset out below. (a) Basis of consolidation The consolidated financial statements incorporate the financial statements ofBegbies Traynor Group plc and entities controlled by Begbies Traynor Group plc(its subsidiaries). Control is achieved where Begbies Traynor Group plc (theCompany) has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The results of subsidiaries are included in the consolidated income statementand the interest of minority shareholders is stated at the minority's proportionof the fair values of the assets and liabilities recognised. Subsequently,losses applicable to the minority in excess of the minority's interest in thesubsidiary's equity are allocated against the interests of the Group except tothe extent that the minority has a binding obligation and is able to make anadditional investment to cover the losses. The results of entities acquired or disposed of during the year are included inthe consolidated income statement from the effective date of acquisition or upto the effective date of disposal, as appropriate. Where necessary, the accounts of the subsidiaries are adjusted to conform to theGroup's accounting policies. All intra-group transactions, balances, income andexpenses are eliminated on consolidation. (b) Business combinations The acquisition of subsidiaries and businesses is accounted for using thepurchase method. The cost of the acquisition is measured at the aggregate of thefair values, at the date of exchange, of assets given, liabilities incurred orassumed, and equity instruments issued by the Group in exchange for control ofthe acquiree, plus any costs directly attributable to the business combination.The acquiree's identifiable assets, liabilities and contingent liabilities thatmeet the conditions for recognition under IFRS 3 are recognised at their fairvalues at the acquisition date, except for non-current assets (or disposalgroups) that are classified as held for sale in accordance with IFRS 5, whichare recognised and measured at fair value less costs to sell. Goodwill arising on acquisition is recognised as an asset and initially measuredat cost, being the excess of the cost of the business combination over theGroup's interest in the net fair value of the identifiable assets, liabilitiesand contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of theacquiree's identifiable assets, liabilities and contingent liabilities exceedsthe cost of the business combination, the excess is recognised immediately inprofit or loss. The interest of minority shareholders in the acquiree isinitially measured at the minority's proportion of the net fair value of theassets, liabilities and contingent liabilities recognised. (c) Intangible Assets Goodwill Goodwill arising on consolidation is recognised as an asset. Following initial recognition, goodwill is subject to impairment reviews, at least annually, and measured at initial value less accumulated impairment losses.Any impairment is recognised immediately in the income statement and is notsubsequently reversed. On disposal of a subsidiary the attributable amount of goodwill is included inthe determination of the gain or loss on disposal. Goodwill arising on acquisitions before the date of transition to IFRS has beenretained at the previous UK GAAP amounts, subject to being tested for impairmentat that date. Other intangible assets Other intangible assets are measured initially at cost and are amortised on a straight-line basis over their estimated useful lives. Carrying amount is reducedby any provision for impairment where necessary. On a business combination, as well as recording separable intangible assetsalready recognised in the balance sheet of the acquired entity at their fairvalue, identifiable intangible assets that are separable or arise fromcontractual or other legal rights are also included in the acquisition balancesheet at fair value. Amortisation on intangible assets is charged at 20% - 50% of cost. (d) Property, plant and equipment All assets are stated at depreciated historical cost less accumulateddepreciation and accumulated impairment losses. Depreciation is charged so as to write off the cost or valuation of assets,other than land, over their estimated useful lives, on the following basis: Computer equipment 33% of costMotor cars 25% of opening book valueFixtures, fitting 15% of costLeasehold improvements evenly over period of lease The gain or loss arising on the disposal of an asset is determined as thedifference between the sales proceeds and the carrying amount of the asset andis recognised in profit or loss for the period. Assets held under finance leases are depreciated over their expected usefullives on the same basis as owned assets, or where shorter, over the relevantlease term. (e) Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of itstangible and intangible assets to determine whether there is any indication thatthose assets have suffered an impairment loss. If any such indication exists,the recoverable amount of the asset is estimated in order to determine theextent of any impairment loss. Where the asset does not generate cash flows thatare independent from other assets, the Group estimates the recoverable amount ofthe cash-generating unit to which the asset belongs. An intangible asset with anindefinite useful life is tested for impairment annually and whenever there isan indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value inuse. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value and the risks specific to the asset forwhich the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset (orcash-generating unit) is reduced to its recoverable amount. An impairment lossis recognised as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset(or cash-generating unit) is increased to the revised estimate of itsrecoverable amount, but so that the increased carrying amount does not exceedthe carrying amount that would have been determined had no impairment loss beenrecognised for the asset (or cash-generating unit) in prior years. A reversal ofan impairment loss is recognised as income immediately. (f) Financial instruments Financial assets and financial liabilities are recognised in the Group's balancesheet when the Group becomes a party to the contractual provisions of the instrument. Cash and cash equivalents Cash and cash equivalents comprise cash in hand and demand deposits and othershort term highly liquid investments that are readily convertible to a knownamount of cash and are subject to an insignificant risk of changes in value. Trade receivables Trade receivables are stated at nominal value less allowances for estimatedirrecoverable amounts. Trade payables Trade payables are stated at their nominal value. Financial liabilities and equity instruments Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is anycontract that evidences a residual interest in the assets of the Group afterdeducting all of its liabilities. Equity instruments Equity instruments issued by the Group are recorded at the proceeds received,net of direct issue costs. Bank borrowings Interest bearing bank loans and overdrafts are recorded at the proceedsreceived, net of direct issue costs. Finance charges, including premiums payableon settlement or redemption and direct issue costs, are accounted for on anamortised cost basis to the income statement using the effective interest methodand are added to the carrying amount of the instrument to the extent that theyare not settled in the period in which they arise. (g) Provisions Provisions are recognised when the Group has a present legal or constructiveobligation as a result of a past event, it is probable that the Group will berequired to settle the obligation and the amount can be reliably estimated. (h) Leases Leases are classified according to the substance of the transaction. A leasethat transfers substantially all the risks and rewards of ownership to thelessee is classified as a finance lease. All other leases are classified asoperating leases. Finance leases Finance leases are capitalised in the consolidated balance sheet at their fairvalue or, if lower, at the present value of the minimum lease payments, eachdetermined at the inception of the lease. The corresponding liability is shownas a finance lease obligation to the lessor. Leasing repayments comprise both acapital and a finance element. The finance element is written off to the incomestatement so as to produce an approximately constant periodic rate of charge onthe outstanding obligation. Such assets are depreciated over the shorter oftheir estimated useful lives and the period of the lease. Operating leases Operating lease rentals are charged to the income statement on a straight linebasis over the period of the lease. Lease incentives are spread over the periodof the lease. (i) Revenue recognition Professional services (Insolvency, Forensics and Corporate Finance)Revenue relating to professional services rendered is recognised when thefollowing conditions included in IAS 18 have been met: • The amount of revenue can be measured reliably; • It is probable that economic benefits will flow to the entity; • The stage of completion of the engagement at the balance sheet date can be measured reliably; and • The costs incurred for the transaction and the costs to complete can be measured reliably. Revenue is recognised on a case by case basis, based on the stage of completion,the fee structure and the partner's estimate of likelihood of completion. When aminimum fixed fee is agreed, it is fully recognised when the necessary elementsof the case are completed for it to be recognised. For contingent fee engagements, revenue is only recognised when it is virtuallycertain at the balance sheet date of a successful outcome to the engagement. Unbilled revenue on individual client assignments is included within recoverableincome and costs on cases within current assets. Consumer debt Nominee fees are recognised following the approval of the creditors' meeting forthe Individual Voluntary Arrangements. Supervisory fees are recognised over the life of Individual VoluntaryArrangements. Re-mortgage commission is recorded at the date on which approval of the mortgageis obtained from the provider. Debt management fees are recorded as the services are provided. (j) Borrowing costs Borrowing costs are recognised in profit or loss in the period in which they areincurred. (k) Pensions and retirement benefits The Group operates a defined contribution scheme in the United Kingdom forcertain employees. The costs of the pension funding borne by the Group ischarged to the income statement as an expense as they fall due. (l) Taxation The tax expense represents the sum of current tax and deferred tax. Current taxation Current tax is based on taxable profit for the period. Taxable profit differsfrom net profit as reported in the income statement because it excludes items ofincome or expense that are taxable or deductible in other years and it furtherexcludes items that are never taxable or deductible. The Group's liability forcurrent tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred taxation Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if the temporarydifference arises from goodwill or from the initial recognition (other than in abusiness combination) of other assets and liabilities in a transaction thataffects neither the tax profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited to equity, in which case the deferred tax is also dealt within equity. (m) Earnings before interest, tax and amortisation (EBITA) EBITA includes the results from operating activities of the Group, stated beforefinance costs, amortisation of intangible assets arising on acquisition andtaxation. Appendix 2: Reconciliation of balance sheets from UK GAAP to IFRS (i) Balance sheet at 30 April 2007 Accounting GAAP differences policy change ------------------------------------------------------- --------------- UK GAAP as Business Deferred Prepayments Impairment Revenue IFRS reported combinations consideration recognition £000 £000 £000 £000 £000 £000 £000 Non current assets Goodwill 39,348 3,114 (441) 0 (110) 0 41,911 Other intangibleassets 187 521 0 0 (187) 0 521 Property plantand equipment 4,277 0 0 0 0 0 4,277 ---------------------------------------------------------------------------------------------- 43,812 3,635 (441) 0 (297) 0 46,709 ----------------------------------------------------------------------------------------------Current assets Trade and otherreceivables 3,583 0 0 0 0 0 3,583 Recoverableincome andcosts on cases 20,130 (236) 0 0 0 (231) 19,663 Prepayments 2,141 0 0 (339) (330) 0 1,472 Cash and cashequivalents 527 0 0 0 0 0 527 ---------------------------------------------------------------------------------------------- 26,381 (236) 0 (339) (330) (231) 25,245 ---------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------Total assets 70,193 3,399 (441) (339) (627) (231) 71,954 ---------------------------------------------------------------------------------------------- Current liabilities Obligations under finance leases 667 0 0 0 0 0 667 Trade and other payables 763 0 0 0 0 0 763 Corporation taxliabilities 1,485 0 0 0 0 0 1,485 Other taxes and social security 2,448 0 0 0 0 0 2,448 Other financialliabilities -deferredconsiderations 2,852 0 0 0 0 0 2,852 Accruals 5,274 0 0 0 0 0 5,274 ---------------------------------------------------------------------------------------------- 13,489 0 0 0 0 0 13,489 ---------------------------------------------------------------------------------------------- Non current liabilities Interest bearing loansand borrowings 4,506 0 0 0 0 0 4,506 Obligations under thefinance leases 625 0 0 0 0 0 625 Corporation tax 193 0 0 0 0 0 193 Deferred Tax 0 1,270 0 (102) (99) (69) 1,000 Other financialliabilities -deferredconsiderations 2,592 0 (276) 0 0 0 2,316 ---------------------------------------------------------------------------------------------- 7,916 1,270 (276) (102) (99) (69) 8,640 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Total liabilities 21,405 1,270 (276) (102) (99) (69) 22,129 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Net assets 48,788 2,129 (165) (237) (528) (162) 49,825 ---------------------------------------------------------------------------------------------- Equity Called up share capital 4,044 0 0 0 0 0 4,044 Share premium account 21,696 0 0 0 0 0 21,696 Other reserves 17,584 0 0 0 0 0 17,584 Retained earnings 5,464 2,129 (165) (237) (528) (162) 6,501 0 0 0 0 ---------------------------------------------------------------------------------------------- Equity shareholdersfunds 48,788 2,129 (165) (237) (528) (162) 49,825 ---------------------------------------------------------------------------------------------- Appendix 2 (continued) (ii) Balance sheet at 31 October 2006 Accounting GAAP differences policy change ------------------------------------------------------- --------------- UK GAAP as Business Deferred Prepayments Impairment Revenue IFRS reported combinations consideration recognition £000 £000 £000 £000 £000 £000 £000Non current assetsGoodwill 40,700 1,177 (441) 0 (110) 0 41,326 Other intangible assets 187 657 0 0 (187) 0 657 Property plantand equipment 4,283 0 0 0 0 0 4,283 --------------------------------------------------------------------------------------------- 45,170 1,834 (441) 0 (297) 0 46,266 ---------------------------------------------------------------------------------------------Current assets Trade and otherreceivables 3,330 0 0 0 0 0 3,330 Recoverableincome andcosts on cases 17,599 0 0 0 0 (235) 17,364 Available forsale financialassets 0 0 0 0 0 0 0 Prepayments 1,518 0 0 (136) (330) 0 1,052 Cash and cashequivalents 547 0 0 0 0 0 547 --------------------------------------------------------------------------------------------- 22,994 0 0 (136) (330) (235) 22,293 --------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------Total assets 68,164 1,834 (441) (136) (627) (235) 68,559 --------------------------------------------------------------------------------------------- Current liabilities Obligations under finance leases 725 0 0 0 0 0 725 Trade and other payables 7,724 0 0 0 0 0 7,724 Corporation taxliabilities 1,761 0 0 0 0 0 1,761 Other financialliabilities -deferredconsiderations 3,822 0 0 0 0 0 3,822 --------------------------------------------------------------------------------------------- 14,032 0 0 0 0 0 14,032 --------------------------------------------------------------------------------------------- Non current liabilities Interest bearing loansand borrowings 9,674 0 0 0 0 0 9,674 Obligations under thefinance leases 661 0 0 0 0 0 661 Deferred tax 0 766 0 (41) (99) (71) 556 Other financialliabilities -deferredconsiderations 4,027 0 (399) 0 0 0 3,628 --------------------------------------------------------------------------------------------- 14,362 766 (399) (41) (99) (71) 14,519 --------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------Total liabilities 28,394 766 (399) (41) (99) (71) 28,551 ---------------------------------------------------------------------------------------------Net assets 39,770 1,068 (42) (95) (528) (165) 40,009 --------------------------------------------------------------------------------------------- Equity Called up share capital 3,779 0 0 0 0 0 3,779 Share premium account 14,185 0 0 0 0 0 14,185 Other reserves 17,584 0 0 0 0 0 17,584 Retained earnings 4,222 1,068 (42) (95) (528) (165) 4,460 ---------------------------------------------------------------------------------------------Equity shareholdersfunds 39,770 1,068 (42) (95) (528) (165) 40,008 --------------------------------------------------------------------------------------------- Appendix 2 (continued) (iii) Balance sheet at 1 May 2006 GAAP differences ----------------------------------------- UK GAAP Deferred Prepayments Impairment IFRS consideration £000 £000 £000 £000 £000 Non current assets Goodwill 37,429 (441) 0 (110) 36,878 Other intangible assets 187 0 0 (187) 0 Property plant and equipment 3,731 0 0 0 3,731 ------------------------------------------------------------ 41,347 (441) 0 (297) 40,609 ------------------------------------------------------------ Current assets Trade and other receivables 4,078 0 0 0 4,078 Recoverable income andcosts on cases 13,942 0 0 0 13,942 Prepayments 1,952 0 (136) (330) 1,486 Deferred tax 0 0 41 99 140 Cash and cash equivalents 598 0 0 0 598 ------------------------------------------------------------ 20,570 0 (95) (231) 20,244 ------------------------------------------------------------ ------------------------------------------------------------Total assets 61,917 (441) (95) (528) 60,853 ------------------------------------------------------------ Current liabilities Obligations under finance leases 681 0 0 0 681 Trade and other payables 835 0 0 0 835 Corporation tax liabilities 1,425 0 0 0 1,425 Other taxes and socialsecurity 1,702 0 0 0 1,702 Other financialliabilities - Deferredconsiderations 1,771 0 0 0 1,771 Accruals 4,200 0 0 0 4,200 ------------------------------------------------------------ 10,614 0 0 0 10,614 ------------------------------------------------------------ Non current liabilities Interest bearing loansand borrowings 8,035 0 0 0 8,035 Obligations under thefinance leases 495 0 0 0 495 Corporation tax 198 0 0 0 198 Other financialliabilities - deferredconsiderations 4,210 (441) 0 0 3,769 Provisions 0 0 0 0 0 ------------------------------------------------------------ 12,938 (441) 0 0 12,497 ------------------------------------------------------------ ------------------------------------------------------------Total liabilities 23,552 (441) 0 0 23,111 ------------------------------------------------------------ ------------------------------------------------------------Net assets 38,365 0 (95) (528) 37,742 ------------------------------------------------------------ Equity Called up share capital 3,744 0 0 0 3,744 Share premium account 13,009 0 0 0 13,009 Other reserves 18,023 0 0 0 18,023 Retained earnings 3,589 0 (95) (528) 2,966 0 0 0 0 ------------------------------------------------------------Equity shareholders funds 38,365 0 (95) (528) 37,742 ------------------------------------------------------------ Appendix 3: Reconciliation of income statements from UK GAAP to IFRS (i) Income statement for the year ended 30 April 2007 Accounting policy GAAP differences change -------------------------------------------- ------------- UK GAAP as Business Deferred Prepayments Revenue IFRS reported combinations consideration recognition £000 £000 £000 £000 £000 £000 Turnover andother revenue 45,058 (344) 0 0 (231) 44,483 Cost of sales (20,053) 0 0 0 0 (20,053) ---------------------------------------------------------------------------------Gross profit 25,005 (344) 0 0 (231) 24,430 Admin expenses (14,950) 0 0 (203) 0 (15,153) Other operatingincome 9 0 0 0 0 9 ---------------------------------------------------------------------------------EBITA 10,064 (344) 0 (203) (231) 9,286 Amortisation (3,951) 3,431 0 0 0 (520) ---------------------------------------------------------------------------------Operating profit 6,113 3,087 0 (203) (231) 8,766 Net interestreceivable andsimilar income (792) 0 (165) 0 0 (957) ---------------------------------------------------------------------------------Profit on ordinaryactivities beforetaxation 5,321 3,087 (165) (203) (231) 7,809 Taxation of profit on ordinaryactivities (1,941) (958) 0 61 69 (2,769) ---------------------------------------------------------------------------------Profit on ordinaryactivities after taxation 3,380 2,129 (165) (142) (162) 5,040 --------------------------------------------------------------------------------- Appendix 3 (continued) (ii) Income statement for the six months ended 31 October 2006 Accounting policy GAAP differences change ---------------------------- -------------- UK GAAP as Business Deferred Revenue IFRS reported combinations consideration recognition £000 £000 £000 £000 £000 Turnover andother revenue 21,857 (108) 0 (235) 21,514 Cost of sales (10,191) 0 0 0 (10,191) ------------------------------------------------------------------- Gross profit 11,666 (108) 0 (235) 11,323 Admin expenses (7,233) 0 0 0 (7,233) Other operatingincome 9 0 0 0 9 ------------------------------------------------------------------- EBITA 4,442 (108) 0 (235) 4,099 Amortisation (1,898) 1,679 0 0 (219) ------------------------------------------------------------------- Operating profit 2,544 1,571 0 (235) 3,880 Net interestreceivable andsimilar income (355) 0 (42) 0 (397) ------------------------------------------------------------------- Profit on ordinaryactivities beforetaxation 2,189 1,571 (42) (235) 3,483 Taxation of profit on ordinaryactivities (807) (503) 0 71 (1,240) ------------------------------------------------------------------- Profit on ordinaryactivities after taxation 1,382 1,068 (42) (165) 2,244 ------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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